Amazon has 1,000,000 shares of 8% preferred stock and 1,200,000 shares of common stock outstanding, each having a par value of $20 per share. No dividends have been paid or declared during 2011 and 2012. As of December 31, 2013, it is desired to distribute $4,000,000 in dividends.( 20 Points)

Instructions

How much will the preferred and common stockholders receive under each of the following assumptions in December 31, 2013?

(a) The preferred is noncumulative and nonparticipating. (4 Points)

(b) The preferred is cumulative and nonparticipating. (4 Points)

(c) The preferred is cumulative and fully participating. (4 Points)